Rents: where is the affordability ceiling?

Around one in three (30%) tenants is spending more than 50% of their take-home pay (i.e. after tax and other deductions) on rent according Rightmove’s latest Consumer Confidence Survey.

The survey of 6,913 existing tenants reveals that, on average, the cost of a ‘rented-roof’ accounts for 38% of tenants’ net monthly income.

The research also reveals that the gap between demand, as measured by search activity on Rightmove, and supply, as measured by available properties to rent advertised on Rightmove, is wider than a year ago as structural rental sector supply issues continue. Search activity on Rightmove is up 43% compared with a year ago, while supply is down 3%, The high percentage of tenants’ income accounted for by rental payments provides new evidence of theextent to which tenants are feeling the rental squeeze. This should provide food for thought for investor landlords eyeing-up further increases in rental returns despite demand continuing to outstrip supply and the on-going expectation from the majority of tenants themselves that rents will be higher in 12 months’ time.